Brain Cramp on 436

[mwyatt]

Have a plan where benefit accruals were frozen by amendment effective February 28, 1997. Plan does provide for lump sum option. Most recent certified AFTAP is in the 60-79% range. Participant has recently left employment and was never a Highly Compensated Employee so early termination restrictions under 401(a)(4) are inapplicable. My reading of IRC 436(d)(4) is telling me that the accelerated distribution restrictions do NOT apply in this case so that there is no restriction on the ability of this participant to receive their full lump sum (ordinarily would be restricted to 50% of lump sum with remainder available as an annuity). Before committing this to the participant want to make sure that I'm reading the Code correctly.

[Andy the Actuary]

Not only would agree that in the described situation lump sums may be distributed but would also suggest that AFTAP certification is not required.

[AndyH]

Agree with no restriction.

[frizzyguy]

Not only would agree that in the described situation lump sums may be distributed but would also suggest that AFTAP certification is not required.

I definitely agree with the logic but if you can get one done without killing yourself, I would. Giving logic to an IRS auditor makes their brains hurt. I can see it now:

"But my checklist says I need the AFTAP?"

"But 436 restrictions don't apply."

"But my checklist says I need the AFTAP?"

"For what though, how does not having one affect the plan?"

"But my checklist says I need the AFTAP?"

"Can you say something else?"

"I need an AFTAP, it's right here on my checklist."

[Andy the Actuary]

Not only would agree that in the described situation lump sums may be distributed but would also suggest that AFTAP certification is not required.

I definitely agree with the logic but if you can get one done without killing yourself, I would. Giving logic to an IRS auditor makes their brains hurt. I can see it now:

"But my checklist says I need the AFTAP?"

"But 436 restrictions don't apply."

"But my checklist says I need the AFTAP?"

"For what though, how does not having one affect the plan?"

"But my checklist says I need the AFTAP?"

"Can you say something else?"

"I need an AFTAP, it's right here on my checklist."

LoL (Out loud). Perhaps, your auditor could use a Hawaiian Punch?